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LEGAL DICTIONARY

Asset

An asset is something that has monetary value and is owned either by an individual or organization. Assets can be both tangible or intangible and are classified differently depending on the specific legal context in question.

Assets are priced according to their market value or book value. Market value refers to an asset's value as priced in the marketplace, while book value is the asset’s value as reported on the balance sheet of a company.

Keep reading to learn more about the most important types of assets and to see relevant examples.

Intangible vs. Tangible Assets

As mentioned above, assets can be both tangible and intangible. A tangible asset has a physical form and finite monetary value define by an appraiser. This can include real property such as a building, or piece of land, or personal property. Tangible assets can also be used to pay back debts.

Intangible assets are not physical in nature but can have long-term value, especially for a business. Examples include intellectual property (such as patents, copyrights, trademarks), business goodwill, exclusive use of contracts, and the marketing rights to a product. When individual items of intangible assets have a value of less than $50 each, they can be aggregated into aggregate property by a holder.

Assets in Bankruptcy Law

In bankruptcy, any form of property which a debtor owns can be considered an asset, as long as it does not carry a bankruptcy exemption. This means that typically a bankruptcy trustee will sell any belonging of an insolvent individual if it holds some financial value that can be paid to the creditors.

Assets in Divorce Law

Assets play an important role in family law, specifically in divorce proceedings. A marital asset is any economic resource that has been attained by one of the two parties during the marriage. This includes anything of monetary value which has been obtained from the marriage ceremony date until the date of actual separation.

Anything that is considered a marital asset will be weighed against the marital debt to determine the division of property and the amount of spousal support. When calculating child support payments, the noncustodial parent’s assets are used to measure the amount they will pay.

Assets in Finance and Accounting

Corporations are required to report all their assets and liabilities in their balance sheet. Under accounting standards and within corporate law, there are two main types of assets that are relevant for a company’s valuation and financing. These are as follows:

  • Current assets: These are assets that are expected to be converted into cash within a year by being sold or through standard business operations. They are also referred to as soft or liquid assets. Examples of current assets include cash, cash equivalents, accounts or notes receivable, inventories, raw materials, marketable securities, and government securities.
  • Fixed assets: This refers to long-term tangible assets which play a role in the operations of a business and are not reasonably expected to be used or sold within a year. They are also known as hard assets and can include equipment, vehicles, furniture, physical plants, land, and furniture.

There is also another type of asset known as a frozen asset. These are not convertible into cash because debt has not been paid, because of a government order, or without incurring heavy loss.

An asset is something that has monetary value and is owned either by an individual or organization. Assets can be both tangible or intangible and are classified differently depending on the specific legal context in question.

Assets are priced according to their market value or book value. Market value refers to an asset's value as priced in the marketplace, while book value is the asset’s value as reported on the balance sheet of a company.

Keep reading to learn more about the most important types of assets and to see relevant examples.

Intangible vs. Tangible Assets

As mentioned above, assets can be both tangible and intangible. A tangible asset has a physical form and finite monetary value define by an appraiser. This can include real property such as a building, or piece of land, or personal property. Tangible assets can also be used to pay back debts.

Intangible assets are not physical in nature but can have long-term value, especially for a business. Examples include intellectual property (such as patents, copyrights, trademarks), business goodwill, exclusive use of contracts, and the marketing rights to a product. When individual items of intangible assets have a value of less than $50 each, they can be aggregated into aggregate property by a holder.

Assets in Bankruptcy Law

In bankruptcy, any form of property which a debtor owns can be considered an asset, as long as it does not carry a bankruptcy exemption. This means that typically a bankruptcy trustee will sell any belonging of an insolvent individual if it holds some financial value that can be paid to the creditors.

Assets in Divorce Law

Assets play an important role in family law, specifically in divorce proceedings. A marital asset is any economic resource that has been attained by one of the two parties during the marriage. This includes anything of monetary value which has been obtained from the marriage ceremony date until the date of actual separation.

Anything that is considered a marital asset will be weighed against the marital debt to determine the division of property and the amount of spousal support. When calculating child support payments, the noncustodial parent’s assets are used to measure the amount they will pay.

Assets in Finance and Accounting

Corporations are required to report all their assets and liabilities in their balance sheet. Under accounting standards and within corporate law, there are two main types of assets that are relevant for a company’s valuation and financing. These are as follows:

  • Current assets: These are assets that are expected to be converted into cash within a year by being sold or through standard business operations. They are also referred to as soft or liquid assets. Examples of current assets include cash, cash equivalents, accounts or notes receivable, inventories, raw materials, marketable securities, and government securities.
  • Fixed assets: This refers to long-term tangible assets which play a role in the operations of a business and are not reasonably expected to be used or sold within a year. They are also known as hard assets and can include equipment, vehicles, furniture, physical plants, land, and furniture.

There is also another type of asset known as a frozen asset. These are not convertible into cash because debt has not been paid, because of a government order, or without incurring heavy loss.